LONDON/DUBAI (BLOOMBERG) – The British navy intervened to stop Iran from blocking a commercial oil tanker leaving the Persian Gulf, heightening friction just as European nations scramble to salvage a landmark nuclear accord. Oil rose.
The BP Plc-operated British Heritage, which can carry as much as 1 million barrels of oil, was attempting to pass through the Strait of Hormuz, a shipping chokepoint at the mouth of the world’s largest oil-producing region, when three Iranian vessels tried to block it on Wednesday (July 10), according to a British government statement.
The incident comes after British forces seized a tanker off Gibraltar earlier this month that was suspected of carrying Iranian oil to Syria. Iran denied the vessel was heading to Syria and vowed to retaliate but the seizure opened up a wrangle that could drag on for months and complicate efforts to contain a brewing crisis over Iran’s compliance with a 2015 deal meant to prevent it from developing a nuclear weapon.
The Royal Navy’s HMS Montrose, which was escorting the tanker, “was forced to position herself between the Iranian vessels and British Heritage and issue verbal warnings to the Iranian vessels, which then turned away,” the British government statement said on Thursday.
“We are concerned by this action and continue to urge the Iranian authorities to de-escalate the situation in the region,” the statement said.
The British Heritage was able to pass through the Strait of Hormuz and was now sailing along the Omani coast, according to tanker tracking data compiled by Bloomberg.
But Thursday’s developments also highlight the mounting risks to shipping in a region that exports about a third of all seaborne petroleum.
BP had been keeping the British Heritage empty inside the Gulf, near Saudi Arabia, rather than risk its seizure by Iran, a person familiar with the matter said Monday.
Six tankers have been attacked since early May, with the US blaming Iran for the incidents, a charge Teheran denies.
Iran’s Revolutionary Guard Corps denied trying to impede the British tanker but said it could act fast if it was ordered to do so.
“If it receives an order to seize foreign ships, naval forces can act fast, with determination and without hesitation within the geographic scope of its mission,” the semi-official Fars news agency reported.
Benchmark Brent crude was 13 cents higher at US$67.14 a barrel in early London trading on Thursday.
Oil has been rallying since the middle of last week as tensions surrounding Iran stoke concerns crude flows may be disrupted.
Tensions in the Gulf have soared since the US quit the multiparty nuclear accord with Iran a year ago and re-imposed sanctions on the Islamic Republic.
In early May, the US tightened penalties on buyers of Iranian oil prompting Iran to begin scaling back its commitments under the deal. Iran said this week it’s enriching uranium beyond the agreed cap and would gradually roll back compliance unless European signatories find ways to ensure it can sell its oil and access the global financial system.
The incident comes after French President Emmanuel Macron’s top diplomatic adviser visited Iran, seeking to persuade the Islamic Republic to reverse course.
Emmanuel Bonne met Foreign Minister Mohammad Javad Zarif and Ali Shamkhani, secretary of Iran’s Supreme National Security Council. French officials say they see room for compromise as Iran’s infringements have been carefully calibrated and Trump has underlined his desire for new talks.
Iran’s dialogue with Europe never stopped but it said it won’t speak to the US unless sanctions are eased first.
Iran is producing oil at the slowest rate since 1986, making US sanctions as effective as the devastating Iraq-Iran war that ended more than 30 years ago. The measures have hit the currency, fuelled inflation and hobbled growth.
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